The Japan see them more great Hit of economy as its nuclear crisis deepens

April 12, 2011, 12: 52 pm EDT by Aki Ito and Keiko Ujikane

April 12 (Bloomberg) — the Japan Economic and fiscal policy Minister Kaoru Yosano said that the earthquake on March 11 can result in a greater success of the economy than previously estimated, indicating appetite superior Government to stimulate a month after the disaster.

"Damage to the economy can be greater than originally planned," Yosano told reporters today in Tokyo. "In addition to disruptions in the supply chain, we have the added gravity of the situation with the nuclear power," referring to the accident at installation of Tokyo Electric Power Co. Fukushima crippled, said today the Government has a corresponding to the Chernobyl disaster 1986 separately severity rating, the minutes of the meeting today showed Bank of Japan officials refrained from discussing measures specific stimulation beyond the expansion of its Fund for the purchase of goods at its meeting in three days after the temblor, a sign that Prime Minister Naoto Kan may need to rely on sales of bond or tax increases for finance the reconstruction. "Consumers will be unwilling to spend until the funds are deployed in the Northeast and reconstruction of Government take hold, according to economist Noriaki Matsuoka.""We are talking about a tax hike, but risks exacerbating the decline of consumer confidence," said Matsuoka, an economist at Daiwa Asset Management Co. in Tokyo. "The Bank of the Japan will likely be want to avoid raising its monthly bond purchases because they think that this would be similar to monetize debt.".The Central Bank is prohibited by the right to directly purchase the public debt of the Government and buys rather 1.8 billion yen ($21 billion) of the titles of the lenders, each month an amount that is unchanged for two years.SlipsConfidence of confidence among the nearest merchants of consumers of the Japan dropped at the fastest pace in March of the cabinet since the tracking data in 2000, a survey revealed last week."Analysts of Capital Economics Ltd. are now forecasting the economy will decline 1.5% this year, revised by a previous estimate for domestic product gross to be unchanged."GDP will then bounce as activity covers the initial shock and the reconstruction of kicked in spending, but recovery will be held back by the increase in taxes and cuts in other expenditure required to help pay the contribution of the Government"," economists led by Julian Jessop, Economist at Capital Economics Chief international, said in a note last week.Damage EstimateThe Government last month estimated that damage by the earthquake and the tsunami be as much as 25 billion yen, which prompted several lawmakers to call for a recovery plan as large as 20 billion yen. These projections covered destruction to the infrastructure, while excluding the broader implications of the economy, including how radiation will affect food and water supply.The Japan increased the rating of the severity of the crisis nuclear Fukushima Tokyo Electric plant at 7 today, the highest reading. Increase the radiation has prompted the Government to expand the evacuation area and stop shipments of contaminated vegetables produced in regions surrounding the facility.Kan aims to compile the first stimulus plan this week that chief spokesman Yukio Edano said can be as much as 4 billion yen. The Minister of finance Yoshihiko Noda said he wants to avoid new obligations to finance this first package of sale and reiterated today to the legislators that it was important for the country of its commitment to fiscal discipline.

-With the help of Mayumi Otsuma in Tokyo. Editors: Lily Nonomiya, Ken McCallum

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To contact the reporter on this story: Aki Ito in Tokyo at the aito16@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in the ppanckhurst@bloomberg.net

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